Marquez Brothers International, Inc. v. Morelia

The opinion of the court was delivered by: Richard Seeborg United States Magistrate Judge

ORDER DENYING MOTION FOR ENTRY OF PRELIMINARY INJUNCTION

I. INTRODUCTION

Plaintiff Marquez Brothers International, Inc. ("Marquez Brothers") seeks to prevent defendant Atletico Morelia S.A. de C.V. ("Morelia") from playing any soccer matches in the United states that are not promoted by Marquez Brothers pending a trial on the merits of Marquez Brothers' claims for breach of contract and other claims for relief. The motion is based on Marquez Brothers' contentions that (1)it will suffer irreparable harm if the requested injunctive relief is not granted; (2) the balance of hardships tilts sharply in its favor; (3) it has a strong likelihood of success on the merits; and, (4) the broader public interest factors weigh in favor of granting injunctive relief. The motion was fully briefed and heard by the Court on August 3, 2005. Because Marquez Brothers has failed to establish that it will suffer irreparable harm if an injunction is not entered, the motion for a preliminary injunction is denied, as explained below.

II. BACKGROUND

Marquez Brothers is a San Jose-based producer and distributor of Mexican food products in the United States. As part of its promotional efforts, Marquez Brothers sponsors many Latin American-themed events such as rodeos, festivals, concerts, and, of particular relevance to the present motion, sports matches and tournaments. Morelia is a Mexican professional soccer club that is a member of the First Division, the Mexican equivalent of America's Major League Soccer ("MLS"). The team's hometown is Morelia, Michoacan, Mexico, and it participates in "friendly" soccer matches in the United States to supplement league and tournament revenue.

In Fall 2002, Marquez Brothers approached Morelia regarding the possibility of sponsoring friendly matches in the United States featuring the team. The parties negotiated a contract in April 2003 that provided for Morelia to participate in ten friendly matches sponsored by Marquez Brothers and against first professional division clubs, such as MLS teams. Morelia would have the right to accept or reject dates and opponents proposed by Marquez Brothers, and no friendly matches would be scheduled within three days of Morelia's league or tournament matches. The contract further provided that the parties had an "understanding" the ten matches would take place before the end of 2004 but that the contract duration would be lengthened if necessary to accommodate the completion of matches that had been "cancelled." Morelia was to be paid $125,000 upon signing, and $125,000 in January 2004. Additionally, Morelia would be paid $25,000 after each match was played.

Each party contends that the other failed to live up to its obligations to schedule the matches contemplated under the agreement. What is not in dispute is that Morelia did not play any Marquez Brothers-sponsored matches in 2003, and Marquez Brothers did not pay Morelia the $125,000 installment slated under the contract for January 2004. Nevertheless, the parties continued to attempt to schedule matches and Morelia did play twice in 2004, once against Atlas in Salinas, California and once against Chivas in San Jose, California. Chivas and Atlas are, like Morelia, members of Mexico's First Division. Marquez Brothers paid Morelia $25,000 after each match, pursuant to the terms of the contract.

In February 2005, ProAmerica World Sports, Inc., ("ProAmerica"), another promoter, contacted Morelia about arranging friendly matches in the United States. ProAmerica was able to arrange a March 23, 2005 match against the L.A. Galaxy, an MLS team. When ProAmerica informed Marquez Brothers of this pending match, Marquez Brothers successfully lobbied the United States Soccer Federation, the American professional soccer governing body, to prevent Morelia from playing any non-Marquez Brothers sponsored matches, a decision the Federation subsequently reversed effective May 1, 2005.

On March 8, 2005, Marquez Brothers filed a complaint in the Santa Clara Superior Court, alleging that Morelia had breached the contract. Marquez Brothers requested that the court grant temporary injunctive relief and, after trial, money damages for the losses it had allegedly incurred. Morelia avers, however, that it was not served with the complaint, and the record before the Court does not include any sufficient proof of service. Instead, Morelia claims it discovered the existence of the lawsuit when Marquez Brothers' counsel faxed a Cal. Civ. Proc. Code § 527(c)(2)(A) notice to Morelia executives, informing them that Marquez Brothers was seeking a temporary restraining order ("TRO") in state court. Morelia was unable to retain United States counsel until after the TRO hearing date had passed and, consequentially, the TRO was granted after an ex parte hearing on May 2, 2005. Morelia removed the case to this Court on May 9, 2005. The TRO expired on May 17, 2005. See Cal Civ. Proc. Code § 527(d)(1); Granny Goose Foods, Inc. v. Brotherhood of Teamsters, 415 U.S. 423, 440 n.15 (1974). Marquez Brothers now moves for entry of a preliminary injunction preventing Morelia from playing friendly matches in the United States unless they are sponsored by Marquez Brothers.

III. STANDARDS

In the Ninth Circuit, in order to obtain a preliminary injunction, the moving party must show either (1) a combination of probable success on the merits and the possibility of irreparable harm, or (2) the existence of serious questions which address the merits of the case and the balance of hardships tips sharply in its favor, with at least a fair chance of success on the merits. Senate of California v. Mosbacher, 968 F.2d 974, 977 (9th Cir. 1992). The Ninth Circuit has stated that "these two formulations represent two points on a sliding scale in which the required degree of irreparable harm increases as the probability of success decreases." Los Angeles Mem'l Coliseum Comm'n v. Nat'l Football League, 634 F.2d 1197, 1200-01 (9th Cir. 1980). A sharp tilt in the balance of hardships can affect the scale. Alaska v. Native Vill. of Venetie, 856 F.2d 1384, 1389 (9th Cir. 1988). Finally, a court finding that the public interest is involved may craft or withhold injunctive relief for the public's benefit. United States v. First Nat'l City Bank, 379 U.S. 378, 383 (1965).

In addition, under any formulation of the test, the moving party must show that there exists a significant threat of irreparable harm. American Passage Media Corp. v. Cass Communications, Inc., 750 F.2d 1470, 1473 (9th Cir. 1985). If the moving party fails to make this showing, the court need not decide whether the party is likely to succeed on the merits. Oakland Tribune, Inc. v. Chronicle Publ'g Co., 762 F.2d 1374, 1376 (9th Cir. 1985).

IV. DISCUSSION

A. Irreparable ...

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